When you’re a freelancer or entrepreneur, money can be tight. It’s hard to part with your hard-earned cash, even when you know it could help your business grow! Sometimes you need to make that investment in order to propel you to the next level, though.
Think that investing in your business when cash is tight isn’t a good idea? Story time: In late 2017, my favorite CRM tool, Dubsado announced that they were retiring their lifetime plans. I had been saving up for it, but I wasn’t quite there yet. Have you been in that spot too? I hemmed and hawed and finally decided to – as Shia LaBeouf or Nike would recommend – Just Do It.
That one investment changed my business.
It’s one thing to know that there are times that you need to make business investments, though, and another to know when and how to do that. Let’s dive into three ways to know when to invest in your business and how to make those investments pay for themselves!
1 | Put in the resources NOW to get a higher return LATER
This is what investing is all about. No, it’s not the dictionary definition, but it’s essentially what you’re doing. After all, if you invest in stocks, you’re putting your resources (money) in NOW with the hopes that it will make a profit LATER. You’re in it for the long-haul and you’re going to do your best to make your money work for you.
Now, there are times that it ISN’T wise to make a big investment. When I invested in the Dubsado lifetime plan, I knew that I had the money in my account. I knew that I had enough in the bank and regularly coming from the business to pay the bills if I bought into Dubsado. If you have to put a big purchase on credit or something like that and don’t have the money to pay it off immediately, I wouldn’t recommend making that investment just yet. You still have to be wise with your money, after all.
Investments should pay for themselves
When I made that investment in Dubsado, I knew I had to get serious about getting some ROI (return on investment) from it. And I had a plan. See, normally when you refer someone to Dubsado, you get a credit for one month of your own Dubsado plan. Practically speaking, if you’re a good affiliate marketer, you could never have to pay for your CRM ever again that way.
With the lifetime plan, there was a bonus, though: since you weren’t paying monthly or yearly anymore, you instead got a refund for each referral, equal to one month of Dubsado’s pricing at the time. You also got a refund for whatever your last payment to Dubsado was and I had paid for a year up front. I did the math and realized that if I referred 23 people to Dubsado, I would make my money back and then some. My investment would pay for itself!
Get creative when making an investment pay off
Sometimes it’s not as straightforward as that, of course. I’ve made investments in other tools like RelayThat, which doesn’t have an immediate monetary return, but which saves me hours upon hours of graphics work. If an investment doesn’t have a monetary gain attached, calculate it based off the time you can save or some other measure of return and use that to make your decision.
This is where making a plan comes into play, though. Once you have a goal in mind, you have something to shoot for. In my case with Dubsado, I created a comparison post for Dubsado vs. 17hats, another popular CRM tool that is a direct competitor with Dubsado. Since I was strategic about it (there weren’t any other direct comparison posts about these two products at the time), I ended up almost immediately consistently getting the top ranking search result for “dubsado vs 17hats” and search queries along those lines.
It’s now less than a year later and Dubsado has officially paid for itself and started to earn me additional referral income.
What investments have you already made that need to pay for themselves? Do you have a plan in place to make that happen or do you need to work on that? Get strategic and make your investments work for you!
2 | Having skin in the game motivates you to grow
Sometimes it’s hard to motivate yourself to make a big change. How many freebies and content upgrades have you downloaded from your favorite blogs?
How many of them have you actually looked at and utilized?
I don’t know about you, but I’m much more likely to sit up and take note of something if I’ve put money into it. The courses that I’ve paid for are the ones I consistently complete. The freebies? Meh, they’re there if I need them, but I’m not as motivated to use them because I don’t have to get a return on investment from them.
Putting in money upfront makes you more likely to see a return on that investment
Once you put hundreds of dollars into something, what are you going to do with it?
Hopefully you’ll be fired up to make the most out of it and make it worth that money! If there’s an area of your business that needs help, it can be worth it to find a tool or service that can assist you in improving it. Once you’ve made that investment, you’ll be more motivated to make things happen and your business will grow as a result.
Don’t let others pressure you into a bad investment that you won’t care about, though
When your other business friends are raving about this new product they’re using, it can be easy to get sucked in. “It’s shiny and new and it could explode your business!” they gush. But if you’re selling your wares on Etsy and don’t have your own website right now, is an SEO tool really going to make a difference in your business?
Whenever you’re considering making an investment, be critical of it. Don’t be afraid to be a skeptic! Check if there’s a return policy and make sure that you can gauge your ROI within that time frame. If you can’t and you aren’t sure if it really will give you a good return – don’t listen to Shia and Nike and just skip it.
3 | Differentiate between wants and true needs when investing
Oh my word, it is SO easy to tell yourself that something is necessary for your business’ wellbeing when you’re in the moment, right?! It looks so shiny and helpful and it’s hard to slow yourself down sometimes. This is one thing that you MUST do when considering a business investment, though. If you jump headfirst into something without full consideration, you could end up regretting it in the long run.
Give yourself 24 hours MINIMUM before making a ‘big’ purchase
If possible, give yourself even more time. Take a few days to think about it. Get some outside input, read some reviews, whatever helps you stay objective about the decision. When you remove yourself from that moment of “OMG, I HAVE TO HAVE IT!!!!” you give your brain a moment to reset. If you sleep on it, you may find you feel differently in the morning.
Train your brain to know what your ‘big’ purchase threshold is, even if it’s only $40
This threshold will vary between businesses AND phases of your own business. If you’re only bringing in $100/month, $40 would be a sizeable investment. If you’re bringing in $10,000/month, $40 might turn into chump change for you, though. Take a look at your own business finances and ignore what anyone else says should be your threshold (unless maybe it’s your accountant).
Once you have that ‘big’ purchase threshold in place, use that as a barometer for your investment decisions. Anything under it can consume less decision-making brain power, but anything that meets or exceeds that threshold needs a second look.
A big purchase forces you to take a good, hard look at what is really an investment
“Is this thing going to help me grow my business?”
That should be the first question on your mind when making an investment decision. If the answer is No, then it is almost certainly a hard pass. After all, if that thing that you’re considering won’t bring in profit in the end, that defeats the purpose of investing.
Overall, investing in your business can pay dividends, but only if you’re smart about it. Make sure that your investment can pay dividends for you later on, either in money or time saved or some other important resource. Remember that putting money down can help motivate you to make real change and progress that will help grow your business. And don’t forget to give yourself a moment to breathe, reconsider, and take a good, hard look at that thing you’re considering investing in for your business BEFORE you actually pay for it!
Leave a comment about your thoughts on investing in your business! Here are some ideas:
What is a big business purchase that you regretted – and why?
What’s a big business purchase that you’re happy you made and how has it paid for itself?
Share your own tips for evaluating a business investment decision!